Derailing California’s money train

Over the last eight years, California politicians raised $1 billion -- $344,503 per day, or $14,354 per hour, 24 hours a day -- according to a recent report by the California Fair Political Practices Commission, or FPPC, which detailed sources and amounts raised. Perhaps most disturbingly, the report -- “The Billion Dollar Money Train” -- found that California’s contribution limits did not apply to nearly one-fourth, or $225 million, of this money.

Why is this disturbing? Because money buys influence over legislation that donors support or oppose.

The state’s campaign contribution laws, put on the ballot by the Legislature as Proposition 34 and passed by voters in 2000, are badly in need of reform. We recommend lowering contribution limits and closing the loopholes that have permitted these end-runs around the laws.

With respect to the $225 million raised outside of the law’s contribution limits, the FPPC asks, “Is it logical to limit the size of contributions to an officeholder’s committee ... and yet allow the same special interests to contribute vastly greater amounts to other committees controlled by the same officeholder?”

About two-thirds of the $225 million was raised through committees controlled by candidates and officeholders. Contributions to these committees are unlimited (some top $2 million from a single individual), and there is little control over how the money is spent. And because there are few controls in place, contributions made to candidate-controlled ballot measure committees increased more than 200,000% between the time Proposition 34 went into effect and the end of 2006, according to the FPPC.

California candidates and officeholders can also solicit unlimited sums through so-called behested payments, which are contributions to a candidate or officeholder’s favorite charity or organization. Nearly one-fifth of the $225 million raised were behested contributions. In fact, because officeholders only report behested payments of $5,000 or more in a single year from a donor, the amount of funds raised in this category was substantially more than the figure reported. For example, an officeholder who serves a four-year term could raise $24,999 from a single source over his or her campaign and term, and not have to report any of those funds.

Unfortunately, even contributions given directly to candidates -- and therefore subject to limits -- are potentially misused. There’s nothing to stop candidates and officeholders from using campaign contributions to supplement their lifestyles while claiming that these expenses are for political, legislative or other governmental purposes. State Sen. Gil Cedillo (D-Los Angeles), for example, reported spending more than $125,000 of his campaign contributions over the last six years on gourmet meals, entertainment, travel and shopping. While candidates and officeholders can permissibly use contributions for such purposes, the problem is that Cedillo apparently spent lavishly and without restriction.

It’s time to change the contribution laws. First, all money raised by candidates and incumbents -- directly or indirectly, through campaign and non-campaign entities -- should be publicly disclosed. This will greatly increase transparency and alert voters to potential undue influence by large donors and possible corruption of elected officials and candidates.

Contribution limits should be lowered to the federal level, whether the money is raised directly or indirectly. Under federal law, candidates can raise $2,400 from a single individual donor per election. California’s limit ranges from $3,900 to $25,600 per donor per election, depending on the office sought. Also, an aggregate limit of $10,000 should be placed on the amount of money individuals and groups can directly or indirectly donate to all candidates, officeholders and political committees each year.

Lastly, campaign funds used for travel, hotels or meals should be subject to per diem restrictions. For overseas trips, campaign contributions should only pay for hotels and meals according to State Department rules, with the official personally paying any charges in excess of those limits. Though officials should not be forced to stay in a dump, neither should they be staying at the plushest hotel if paid for by campaign contributions.

The questions raised by the FPPC’s report should be only a first step to implementing badly needed reforms. The outdated money train must be derailed and replaced with a more effective, modern vehicle of campaign finance that can restore public confidence in our political officials.

Robert M. Stern is president of the Center for Governmental Studies and a principal coauthor of the 1974 Political Reform Act of California. Molly Milligan is a senior fellow at the center’s Governance Project.